Creating a Prosperous Economy
- Repeal the Public Finance Act
Currently the Public Finance Act states that the Government must run the economy of New Zealand as if it were a household. It also states that like a household, fiscal responsibility is measured by the ability of the government to balance the books. In other words, over a reasonable period they must spend less into the economy than they tax out in revenue, and that any amount spent over the revenue must be borrowed. New Zealanders recognise this fiscal behaviour as this is how all ‘currency users’, or private citizens and businesses must operate.
However, the legislators have failed to recognise that the New Zealand Government is not a ‘currency user’ like citizens and businesses, and that it does not do anything to produce revenue. The New Zealand Government is an entirely separate entity to the public and private businesses. It is the only authorised entity that can act as the ‘currency issuer’ of the sovereign New Zealand Dollar. The currency it issues is fiat currency, or new government money. It does not need tax revenue to issue it, nor does it need to borrow from another organisation or country to issue the sovereign New Zealand currency. At present, from advise by neo-classical economists, the New Zealand Government runs a ‘limited money supply’ model. It limits the budget (money supply) to the sum of taxes and borrows the balance ‘only’ because of bad advice, bad legislation and a complete lack of knowledge in how to responsibly operate the New Zealand monetary system.
The result of this bad advise and legislation is that the New Zealand public are some of the most indebted people in the world. We are now a low wage and low productive country with terrible social problems and a lack of infrastructure.
The New Zealand Government is already authorised to issue currency responsibly into the economy. “Responsibly” means that it should issue currency into the economy and tax out currency to match the capacity available at any one time. Thus, providing for a productive and diverse economy that always has the people at the centre of it, rather than what successive governments have been doing for 40 years or so, operating a limited monetary system that ignores people and is centred around an illogical policy of balancing the books.
Once the Public Finance Act has been repealed the One New Zealand Party will have allowed the government to invest into infrastructure, health, education and the people in ways it hasn’t been able to in about four decades. We will allow the government to prevent the thousands of unnecessary deaths and ruined lives through a lack of ability to spend and a nonsensical want to balance books instead.
- Introduction of a capacity based monetary supply system
This does not need any structural changes to achieve. In fact there is no need to change anything about how the government issue currency. Policy decisions can be made with the knowledge that the government do not need revenue to spend and so all spending decisions will be based around the capacity for the money to be used productively. For instance, the government can fund any approved medicines and therapeutic products. They can buy all the available labour, if a road needs building and there is a company available to build it, then the government should call for tenders and issue the currency to build it. The money supply decisions will always be about the requirements of the people and the capacity available to achieve it, not the amount of money available. As the New Zealand Government are the sole authorised issuer of the sovereign New Zealand Dollar, they can never be insolvent and they can always meet their fiscal responsibilities.
- Introduce a government guaranteed job scheme based on $35Kpa. tax free
When a society allows its people to become unemployed often it makes them, through no fault of their own, unemployable. It also often ends up creating major and expensive societal problems that are almost impossible to solve. The One New Zealand Party, through running a capacity-based monetary system, will have largely used the available labour. However, there must be a system in place that captures anyone who finds themselves, for one reason or another, out of work. The scheme will be funded by the government and run through regional local government programs. With the regions designing work that suits their individual communities.
- The first $35Kpa of wage and salaries, including businesses will be tax free
Because the government (the currency issuer) do not require taxes to fund spending, the tax rates can be dramatically lowered. Currency users must still pay tax as this is how the state bind the people into an economic relationship and so provide for the people.
- Reduce the tax rate on wage & salaries to a flat 20% up to $250Kpa
Because the government (the currency issuer) do not require taxes to fund spending, the tax rates can be dramatically lowered. In the future we will not rule out further reductions.
- Tax rate on earnings above $250Kpa will be 40%
Now we see one of the ways in which tax should be used, we can use taxes to stop the money flow in one direction. However, we must not prevent innovation, endeavour and entrepreneurship. We welcome wealthy people, they usually do most of the employing. It’s just not OK to have people below the poverty line.
- Reduce the corporate tax rate to a flat 20%
Because the government (the currency issuer) do not require taxes to fund spending, tax rates can be dramatically lowered. With lower tax rates and more commercial activity, corporates and businesses will be able to pay higher rates. The wage rate and government guaranteed job scheme must be balanced so that the private sector is always a more lucrative place work. We must also allow businesses to be competitive with overseas suppliers or manufacturers. We will not rule out lowering tax rates further.
Because the government (the currency issuer) do not require taxes to fund spending, there is no requirement for a repressive goods and service tax. This tax was primarily designed to fleece the workers and businesses of their hard earned money.
- Minimum wage in private sector $20 per hour
With lower tax rates and more commercial activity corporate and businesses will be able to pay higher rates. The wage rate and government guaranteed job scheme must be balanced so that the private sector is always a more lucrative place work.
- Free health care for pensioners and children
Health care will be state funded for all pensioners and children. For all other New Zealanders, it will be a mixture of subsidized and free.
- The pension will be $35Kpa and tax free
The age for the New Zealand Pension will be set at 65 years of age and over. It is available to all legal New Zealand citizens who have lived here for 10 years since age 20, with five of those years since you turned 50. The One New Zealand Party will guarantee that as long as it is in government, the age for eligibility will not increase and the amount paid will not decrease.